Recently, the Jharkhand High Court held that the power under Articles 226 and 227 of the Constitution can be invoked for interfering with an interim order only in exceptionally rare cases and the Arbitral Tribunals are not bound by the strict rigours of CPC and an amendment is permissible at any stage of the proceedings for the purpose of determining the real question in controversy between the parties.
Brief Facts:
The petitioner has filed a writ petition seeking to quash the order issued by the sole Arbitrator, which granted the respondent's amendment petition under Section 23(3) of the Arbitration and Conciliation Act, 1996 and Order 6 Rule 17 of the Code of Civil Procedure, 1908. The dispute pertains to a contract for the construction of a bridge over the Konar River, including its approach road and an overbridge on the Gomoh-Barkakana railway line at BTPS. Arbitration proceedings were initiated to resolve the matter and are set to conclude on 17.02.2025.
Contentions of the Petitioner:
The Learned Counsel for the Petitioners argued that the documents brought on record through the amendment petition were available to the claimants from the beginning, and no explanation was provided for their delayed submission. They contended that under Order 6 Rule 17 of CPC, an amendment is impermissible unless the party establishes that it could not have raised the issue earlier despite due diligence. It was further submitted that the arbitral tribunal failed to consider these objections while allowing the amendment.
Contentions of the Respondent:
The Learned Counsel for the Respondent raised a preliminary objection regarding the maintainability of the writ petition, arguing that an interim order of an arbitrator cannot be challenged under Articles 226 and 227. Citing Section 5 of the Arbitration and Conciliation Act, 1996, the respondent emphasized that judicial intervention is barred unless explicitly permitted by the Act. It was contended that the petitioners had an alternative remedy under Section 34 of the Act to challenge the final award.
Observations of the Court:
The Court held that the scope of judicial intervention in arbitration matters is extremely limited and should be exercised only in rare circumstances. It is noted that arbitral tribunals are not bound by the strict procedural rules of the Code of Civil Procedure, and amendments to pleadings can be allowed if they help determine the real issues in controversy.
The Court referred to Serosoft Solutions Private Ltd. v. Dexter Capital Advisors Pvt. Ltd., where it was held that writ jurisdiction should only be exercised in cases of manifest bad faith or lack of jurisdiction by the arbitrator. The Court further noted that the amendment application was necessitated by the ruling in Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd. & Anr., which clarified principles related to price escalation and contract breaches. The Court emphasised that an amendment that does not change the nature of the dispute but only supplements factual aspects should generally be permitted in arbitral proceedings.
Additionally, the Court held that arbitral tribunals are empowered to allow amendments at any stage of the proceedings if they contribute to resolving the core dispute. It reiterated that judicial intervention under Articles 226 and 227 is permissible only in rare and exceptional circumstances where an arbitrator’s decision is wholly unreasonable, arbitrary, or suffers from a lack of jurisdiction. The Court also found that the petitioners had an adequate remedy under Section 34 of the Arbitration and Conciliation Act and that if courts were to intervene in interim arbitral orders, it would defeat the purpose of arbitration as an efficient and independent dispute resolution mechanism.
The decision of the Court:
The writ petition was dismissed. The interim order of the arbitral tribunal allowing the amendment to the statement of claim was upheld, and the petitioners were directed to pursue remedies available under Section 34 of the Arbitration and Conciliation Act if they sought to challenge the final award.
Case Title: Rites Ltd. v. Damodar Valley Corporation
Coram: Hon’ble Mr. Justice Gautam Kumar Choudhary
Case No.:W.P. (C) No. 311 of 2025
Advocate for the Applicant: Mr. M.S. Mittal, Sr. Advocate; Mr. Srijit Choudhary, Advocate
Advocate for the Respondent: Mr. Sumeet Gadodia, Advocate; Mrs. Shilpi Sandil Gadodia, Advocate; Mr. Prakhar Harit, Advocate; Mr. K. Hari, Advocate; Ms. Sanya, Advocate
